Nascent Competitors

32 Pages Posted: 19 Jun 2020 Last revised: 3 Apr 2021

See all articles by C. Scott Hemphill

C. Scott Hemphill

New York University School of Law

Tim Wu

Columbia University - Law School

Date Written: June 11, 2020


A nascent competitor is a firm whose prospective innovation represents a serious threat to an incumbent. Protecting such competition is a critical mission for antitrust law, given the outsized role of unproven outsiders as innovators and the uniquely potent threat they often pose to powerful entrenched firms.

In this Article, we identify nascent competition as a distinct analytical category and outline a program of antitrust enforcement to protect it. We make the case for enforcement even where the ultimate competitive significance of the target is uncertain, and explain why a contrary view is mistaken as a matter of policy and precedent. Depending on the facts, troubling conduct can be scrutinized under ordinary merger law or as unlawful maintenance of monopoly, an approach that has several advantages.

In distinguishing harmful from harmless acquisitions, certain evidence takes on heightened importance. Evidence of an acquirer’s anticompetitive plan, as revealed through internal communications or subsequent conduct, is particularly probative. After-the-fact scrutiny is sometimes necessary as new evidence comes to light. Finally, our suggested approach poses little risk of dampening desirable investment in startups, as it is confined to acquisitions by those firms most threatened by nascent rivals.

Keywords: Antitrust, Facebook, Microsoft, Nascent Competition, Platforms, Potential Competition

JEL Classification: K21, L40, L41, D42

Suggested Citation

Hemphill, C. Scott and Wu, Tim, Nascent Competitors (June 11, 2020). University of Pennsylvania Law Review, Forthcoming, NYU Law and Economics Research Paper No. 20-50 , Columbia Law and Economics Working Paper No. 645, Available at SSRN: or

C. Scott Hemphill (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Tim Wu

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States

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